A key lesson for leaders from SAP’s CEO: ‘You cannot solve everything with technology.’

Christian Klein, CEO of SAP · Fortune · Courtesy of SAP

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On this episode of Fortune’s Leadership Next podcast, host Diane Brady talks to one of the youngest CEOs in the Fortune 500, SAP's Christian Klein. They discuss what Klein has learned in his first five years as CEO, how regulation of technology hinders innovation, and the challenges of transforming a company.

"What you have to admit, even as a technology CEO, is that you cannot transform a company just by implementing new technology. This is key," said Klein. "You have to change oftentimes how people work, how we code software, how we deliver software, how we sell. And then it's a cultural change."

Listen to the episode or read the transcript below.


Transcript

Diane Brady: Leadership Next is powered by the folks at Deloitte who, like me, are exploring the changing roles of business leadership and how CEOs are navigating this change.

Welcome to Leadership Next, the podcast about the changing rules of business leadership. I’m Diane Brady.

Everyone talks about digital transformation, but how does a company that enables transformation in others transform itself, especially if you're a European giant that has to navigate a shifting regulatory climate, geopolitical risk, multiple cultures, and of course, an ever more competitive landscape? I spoke to Christian Klein, the CEO of SAP, about what he's done in the past five years, what he sees ahead, and how he's trying to shift the culture as one of the youngest CEOs of the Fortune 500. Take a listen.

[Interview begins.]

Christian, thanks for joining us.

Christian Klein: Yes, thanks for having me.

Brady: So you are now more than five years into this job. So let's walk back a little bit and start by telling people where is SAP today versus where it was when you came in. When you came into the CEO role, what did you want to do?

Klein: I mean, when you look at the brand of SAP, looking where the business was five years back. Indeed, I mean, SAP was probably known for developing great EIPs [enterprise integration patterns],supply chains, HR, finance, but also SAP was a little bit known like, Oh, I have to install this software and I hope nothing breaks when I install it. It's complex. It's also complex business, which we run. I mean, supply chain, manufacturing. And of course I felt, yeah, also by working with customers and also the good piece is I also worked with our own software. That helps. So my job before was as the chief operating officer to transform SAP. I said, Hey, there's something right with cloud. And I see, you know, you can have faster speed of innovation, you have more agility to consume new innovations. So I thought, Hey, coming in, it's time to change the strategy, to change our business model. And here we are, I guess, you know, five years later. I mean, there were big question marks. Will SAP make it? There was a share price drop when I took some profit away because the change of the business model means you need to change the financials of the company. But here we are. And I would say today there is a lot of confidence. Rightfully, customers are happy. Still of course, for the people, change always means uncertainty. I don't want to underplay that. I mean, there's a lot of over-communication you have to do. But so far so good. So I'm very happy how it turned out.

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